ADB to finance Lumbini airport expansion

KATHMANDU, Dec 17: Asian Development Bank (ADB) has responded positively to provide additional soft loans of around US$ 36 million to the government for upgrading Gautam Buddha Airport (GBA), a development which has raised optimism that the process to develop regional international airport at Lumbini will finally kick off.

The project was in limbo since June, 2012, mainly after a detail feasibility study (DFS) commissioned by the Civil Aviation Authority of Nepal (CAAN) showed that the cost of upgrading the airport would be double than what ADB had estimated earlier.

“ADB has assured us verbally that it will provide the additional soft loans. We are hopeful that a deal to this connection will be signed within a week,” Murari Bhandari, project coordinator of GBA told Republica.

Top officials of CAAN also said they were hopeful they would be able to call the tender for implementing the project by the end of this month.

Under the project said to be completed in two phases, the CAAN in the first phase has been planning to expand its area to over 13,000 square meters, add 300 meters to the existing runway . It would also install a new control tower, build a customs and cargo building and other facilities including upgrading emergency response system.

The first phase of upgradation also includes construction of an exit taxiway with flexible pavement, a new international aircraft parking apron with rigid pavement, construction of a periphery road, and rehabilitation of the existing runway for conversion into a parallel taxiway with flexible pavement.

Once the first phase of upgradation is completed, Bhandari said the airport will have the capacity to handle 600,000 passengers annually with aircraft such as Boeing 757 (category 4E level aircraft) able to operate from the airport..

But the new estimation in DFS, which was carried by a Korea-based consulting firm, says the cost of completion of the first phase of GBA upgradation alone will go up to around US $ 77 million.

Previous study carried out by the ADB four years ago had put the total cost of first phase upgradation at around US $ 35 million. Based on that assessment, the government had decided to move the project ahead and signed an agreement with ADB, under which latter agreed to provide a soft loan of around US $ 38 million under the South Asia Tourism Infrastructure Development Project. Going by the agreement, the government Nepal need to bear 15 percent of the total cost.

But as the new estimate rattled the CAAN, it had instantly turned to the Ministry of Finance (MoF) to arrange additional funds. Writing a letter to MoF in June, CAAN had suggested the government to either arrange the additional budget itself or initiate dialogue with ADB to raise the volume of assistance.

“We are happy that the donor is positive and the project will now move ahead,” Suman Shrestha, deputy director general of the CAAN said. Owing to confusion so far, however, he said the expansion work will not be completed by 2014, as it had been targeted earlier.

CAAN has targeted to complete the last phase of upgradation of the airport by 2030. After that, the airport will be able to handle up to six million passengers annually.